Swiss luxury group Richemont soars on JSE on strong sales, profits

Publish November 15, 2021

RICHEMONT, the Swiss luxury group chaired by billionaire Johann Rupert, touched record highs on the JSE to close 10 percent higher on Friday at R223.93 after posting bumper sales for the half-year ended September and announcing that it was in talks to boost its partnership with e-commerce platform Farfetch.

As if to shrug off criticism of poor valuation, Richemont, which owns jewellery brand Cartier, said sales had significantly exceeded pre-pandemic levels during the six months under review.

Sales were 20 percent higher than the pre-pandemic levels of the six-month period ended September 30, 2019, said Richemont. On a year-on-year basis, sales increased by 65 percent at constant exchange rates and by 63 percent at actual exchange rates to €8.91 billion (R156.8bn), leading to an operating profit of €1.95bn.

The group said its Jewellery Maisons had emerged ever stronger from the global economic crisis caused by the Covid-19 pandemic, achieving record half-year sales and an operating margin of 37.9 percent.

Commenting on the results, Rupert said Richemont had delivered an excellent set of results in the first six months of the financial year, a period marked by a volatile but improving “post-vaccination” environment.

These results demonstrate the strength of our business model and the benefits of patient long-term capital,” said Rupert.

The group’s operating profit in the period increased by a whopping 331 percent compared to a year earlier to €1.95bn, and was 67 percent higher compared to the six-month period ended September 30, 2019.

“The substantial increase in operating profit combined with a careful management of working capital led to cash flow from operating activities nearly doubling to €1.7bn,” said Rupert.

Profit for the period rose to €1.25bn and net cash amounted to €3.15bn at the end of September 2021.

In a separate statement, Richemont said it was in advanced talks to further strengthen its partnership with Farfetch, a British-Portuguese online fashion platform. As part of the transaction, Farfetch would invest in Yoox Net A Porter (Ynap) as a minority shareholder.

The group said it had made further progress towards creating a neutral, industry-wide platform, built on the latest omni-channel retail technologies, “to support the digitisation of the luxury industry”.

“In this context, Richemont is in advanced discussions with Farfetch with a view to enhancing the partnership it established last year,” said Richemont.

The announcement followed reports that Richemont may be looking to sell the loss-making Nyap, an online luxury and fashion retailer that it acquired in 2018.

Richemont has been bringing Ynap retail offerings to Chinese consumers following a strategic partnership with Chinese technology group Alibaba in 2018.

Last week, activist investor Third Point reportedly charged that there was “significant unrecognised value” within the luxury goods firm Richemont.


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